Government Attacks Inflation-Busting EU Budget

EU Budget Gets a Kicking From UK

The government has launched a new assault on euro-spending as Brussels called for an inflation-busting budget for next year.

The European Commission said a rise of nearly 7% for 2013 was needed to pay bills for EU projects already signed off by member states.

One official said: "It's the difference between the commitments made on the EU budget, and the payments needed to honour them.

"Member states have been using the credit card and have left the Commission to pay the bill."

But a UK spokesman said: "The UK has been consistent that at a time when member states are tightening their belts, the EU must show budgetary restraint."

The UK, Germany and France have led a months-long fightback to force Brussels to apply national-style belt-tightening to the euro-budget.

Prime minister David Cameron has been calling for an effective freeze on EU spending during the economic crisis.

That means nothing more than inflation-linked annual rises in the amount of cash the 27 EU counties between them provide to run the EU's financial programmes, from farm subsidies and regional grants to development aid spending.

A similar battle last year saw the Commission's plans pegged back to an inflation-only rise, but Brussels says it cannot act as budget paymaster if member states do not provide enough cash this year to pay for spending commitments already made and now due for payment.

The Commission's plans would increase the EU budget to about £130 billion next year, of which the UK's share is nearly 12.5%.

In forthcoming haggling over the final budget figure, the Commission will argue that the EU budget cannot be equated with national budgets.

The prime minister's official spokesman said: "Clearly that kind of increase, an increase that is in excess of inflation, is unacceptable when governments across Europe are having to make very difficult decisions on public spending.

"We will be talking to other countries and pushing for a much more realistic budget that recognises the economic situation in Europe and those difficult decisions that countries are having to make.

"Last year, we worked with other countries to bring down the proposals for a large increase in the budget and we will be doing the same this year."

Officials point out that euro-spending is fed back to governments to finance major projects including road and rail networks across Europe, social regeneration of poor areas and to tackle "pan-European societal challenges" such as climate change, or the ageing society.

These are long-term issues for which financing by the Brussels purse replaces cash lost at home through austerity measures.

A Commission statement said Brussels was "fully aware" of the current economic situation, insisting the budget plan was "fully-geared to use its funding potential for growth and jobs in line with the Europe 2020 strategy".

The euro-budget is equivalent to about 1% of combined EU member state national wealth.

It said: "Though relatively small in size, it is an important tool in furthering the goals of European integration. Directly or indirectly, all European citizens benefit from some activity funded from the EU budget, be it in the form of safer food on our plates, better roads, or the guaranteeing of our fundamental rights."

Apart from anything else, says the Commission, failure to agree a rise of 6.8% next year will leave Brussels about £160 billion short of meeting all the financial commitments already made to recipients of EU funds next year.

But former EU chief accountant Marta Andreasen - now a UK Independence Party MEP - said a 6.8% increase was "cloud-cuckoo land stuff".

She said: "Has the European Commission finally completely lost its grip on reality?

"The Commission has the gall to ask EU citizens for more money, assuring them that the new 2020 Agenda will lead them to the promised land."

She added: "The budget rise demand is selfish, unrealistic and deeply insulting to taxpayers who have not seen a single return on their investment. Instead they are subjected to huge waste, dodgy accounting and vanity projects."

Conservative leader in the European Parliament Richard Ashworth said an EU budget increase which would add nearly £900m to the UK's contribution - taking it to £14 bn - was "so outlandish that it can only provoke anger or incredulity.

"The priority should instead be reallocation within an overall budgetary freeze, focusing on those areas that are known to be of most benefit to taxpayers - targeting growth, tackling high unemployment and abandoning a lot of costly pet projects."

However, Commission president Jose Manuel Barroso defended the 6.8% proposed rise as a direct contribution to jobs and growth in Europe and urged EU leaders to "speak the truth" about the EU budget.

It was not "money for Brussels", he insisted, but money for Europe, ploughed back to the member states for the benefit of citizens.

He said it was member states themselves, including the UK, which wanted more spending on key projects - and expected the Commission to pay for them on time.

"There is sometimes a complete contradiction between the positions that the governments take publicly - some governments saying 'We want to reduce the budget' - and afterwards they are the first to ask for an increase of the budget in the projects that are of course for their direct interest.

"So, let's not make this a question of a fight between the European institutions and the governments, because it is not true.

"My appeal to all governments of Europe is to speak the truth."

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